State Undertakings Hit Bond Street

Two state undertakings are entering the market to raise at least Rs 300 crore.

The Andhra Pradesh Power Finance Corporation will tap the bond market next week to raise Rs 200 crore, while Jammu & Kashmir State Power Development Corporation will raise Rs 100 crore.

In a related development, construction firm Gammon India Ltd today placed a 90-day commercial paper for Rs 5 crore with a state-run bank. The 90-day period begins on September 3.

The AP Power Finance issue, which opens on Monday, includes an unspecified greenshoe option. The issue is likely to close on October 7.

The J&K State Power Development Corp issue, which opens on Thursday, includes a 50 per cent greenshoe option. In other words, the issuer can retain oversubscription of up to Rs 150 crore. The AP bonds, guaranteed by the state government, have been rated A(SO) by the Credit Rating Information Services of India Ltd, which indicates adequate safety.

 

The issue has three options: A seven-year bond with a put-call after five years, paying 11.20 per cent annually; a 10-year bond with a put-call after seven years, paying 11.40 per cent annually; and a 12-year bond with a 10-year put-call, paying 11.60 per cent annually.

Arrangers to the issue include AK Capital Services, Allianz Securities Ltd, Bajaj Capital, Centrum Finance, Karvy Consultants and SBI Capital Markets Ltd.

The J&K issue, guaranteed by the state government, is rated A (structured obligation) by Credit Analysis and Research Ltd, indicating adequate safety.

This too has three options: A five-year bond with a three-year put-call, paying 11.10 per cent yearly; a seven-year bond with a five-year put-call, paying 11.40 per cent annually; and a 10-year bond with a seven-year put-call, paying 11.60 per cent annually.

Arrangers to the issue include AK Capital Services, Centrum Finance and SBI Capital Markets Ltd.